Younger pensioners receive £11,000 extra state pension over a 20-year retirement
The state pension is the bedrock of many people’s finances in retirement — and after a lifetime of paying national insurance contributions, it’s no wonder that pensioners expect their dues.
But an over-complex system means it can be difficult to know exactly how much you will get. Millions of people fall short of receiving the ‘full’ advertised payouts, despite diligently paying all the required National Insurance contributions throughout their working lives.
There are two main types of state pension: the ‘basic’ state pension, which is paid to those who reached pension age before April 6, 2016; and the ‘new’ state pension, for those who reach it after that date.
The basic pension, also known as the ‘old’ state pension, pays up to £141.85 a week, or £7,376 a year.
The new state pension, received by men born on or after April 6, 1951, and women born on or after April 6, 1953, pays a flat rate of up to £185.15 a week, equivalent to £9,628 a year.
Both the basic and new state pension increase each year in line with whichever is the highest of inflation, earnings growth or 2.5 per cent, under a mechanism called the triple lock. In April this year, the payments will increase by 10.1 per cent — last September’s rate of inflation.
The basic state pension will rise by £14.35 a week to £156.20, while the new state pension will jump by £18.70 to £203.85.
The gap between the two payments will increase to £47.65 a week or £2,478 a year. Over the course of a 20-year retirement, that adds up to a giant £49,560 difference between the two state pension rates.
Source of data and images: dailymail